Are State-Owned Enterprises Good Citizens in Environmental Governance? Evidence From the Control of Air Pollution in China

• DOI: 10.1177/00953997211005833
• Published date: 01 September 2021
• Date: 01 September 2021
• Subject Matter: Articles

https://doi.org/10.1177/00953997211005833

Administration & Society

2021, Vol. 53(8) 1263 –1292

© The Author(s) 2021

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DOI: 10.1177/00953997211005833

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Article

Are State-Owned

Enterprises

Good Citizens in

Environmental

Governance? Evidence

From the Control of Air

Pollution in China

Jiaqi Liang1 and Laura Langbein2

Abstract

As profit-seeking corporations, state-owned enterprises (SOEs) have

incentives to maximize profits from economic activities. However, subject

to state ownership, SOEs are expected also to be more accountable for

public welfare than their private counterparts. This study examines whether

SOEs’ relative provincial dominance reinforces government’s demand

to reduce air pollution in China, in the context of anticorruption and

performance management. The results suggest that greater relative SOE

dominance reduces sulfur dioxide emissions, but this effect is significant only

in provinces with a low level of corruption case investigations. Performance

management has no discernible moderating impact on the effect of SOE

relative dominance.

Keywords

state-owned enterprises, anticorruption, performance management,

environmental policy, China

1University of Illinois at Chicago, USA

2American University, Washington, DC, USA

Corresponding Author:

Laura Langbein, Department of Public Administration and Policy, School of Public Affairs,

American University, 4000 Mass. Av. NW, Kerwin 346, Washington, DC 20016, USA.

Email: langbei@american.edu

1005833AAS0010.1177/00953997211005833Administration & Society XX(X)Liang and Langbein

research-article2021

1264 Administration & Society 53(8)

Introduction

Firms, regardless of ownership, that produce goods desired by consumers but

whose production harms the environment and public health, seek profits.

Businesses and corporations have been one of the most important stakehold-

ers and actors in environmental governance,1 particularly policy-making and

implementation. Increasingly, environmental harm has been socially costly,

especially in China (Alkon & Wang, 2018; Li et al., 2017; World Bank,

2007). The Chinese Communist Party (CCP), compared to a single autocrat,

is a dominant, collective group. As opposed to an autocrat or a reelection

seeking party in a democracy, the Chinese party-state,2 with a long-term time

horizon, values collective gains and seeks to avoid collective loss (D. L.

Yang, 2017, pp. 6–7). Collectively, the party-state is well aware that, at some

point, environmental degradation is detrimental to the health and productiv-

ity of the labor force, raises health care costs, and ultimately breeds social

unrest. While environmental pollution has collective costs, the producers of

pollution are individual actors. At least in the case of most pollution, reducing

external collective harm is costly to each individual firm because it usually

shrinks profits. Consequently, competitive firms have little incentive to

reduce public harm at the cost of reduced profits.

As a critical actor in manufacturing and industrial sectors, many state-

owned enterprises (SOEs) are driven by the fundamental mission of profit-

ability (Lorentzen et al., 2014), which may be a counteracting force to the

pursuit of the goal on environmental protection (a collective cost and harm to

society). Moreover, economically salient SOEs may be in a politically power-

ful position to negotiate for a more lenient regulatory enforcement. Thus,

SOEs may have a lower level of environmental performance. However, to

mitigate environmental pollution, one policy response is for government to

exercise varied levels of indirect management control through SOEs, which

often are prominent environmental polluters, to regulate their behavior to help

achieve outcomes desired by government (Dibley, 2019; Nasiritousi, 2017).

Therefore, SOEs may have more incentives to pursue collective benefits than

private firms, leading to a higher level of environmental performance.

In China, in addition to organizational ownership, the party-state has

increasingly used anticorruption efforts and performance management, which

are two recent, prominent government reforms, to shape administrative

agents’ incentives and behavior in accomplishing policy goals. Anticorruption

efforts highlight the possibility of imposing punishment on policy imple-

menters for using bribes to evade rules or skew outcomes (Dong et al., 2010;

Gong, 2015; Johnston, 2011). Performance management, featuring results-

oriented and high-powered reward/punishment structures, holds leadership

accountable for the policy outcome of their organizations (Carter & Mol,